The current crisis in Sri Lanka and Pakistan, fueled by the economic mismanagement of the incumbent governments, has once again brought attention back to the Chinese “debt trap”.
Write for the Israel time, Fabien Baussart said that the crises are undoubtedly fueled by politicians who try to enrich themselves while remaining in power. However, they are supported in the short term by Chinese projects financed by the latter’s banking institutions.
These factors add up to become an economic noose around the recipient’s neck, said Baussart, who is the chairman of the Center for Political and Foreign Affairs (CPFA).
He argued that it was the Belt and Road Initiative (BRI) in Sri Lanka that caused the government to collapse in the face of street protests caused by severe shortages of essentials.
“In Pakistan, it is the largest China-Pakistan Economic Corridor (CPEC), infamously known as the ‘Chinese East India Company’, a symbol of colonization. This voice, muffled by media suppression, promises to return as Pakistan goes to the polls later this year,” Baussart wrote.
In addition, the CPFA President explained how the list of countries “trapped” by Chinese debt is growing.
More than 40 countries have felt the harsh impact of Chinese benevolence which seems poised to lift its people out of poverty, but instead plunges them into mounting debts that are becoming difficult to repay, let alone repayment, he said. -he declares.
Among them are Laos, Zambia and Kyrgyzstan. They mainly include less developed economies, but some like Malaysia are in between.
China’s Belt and Road Initiative (BRI) has left dozens of low- and middle-income countries (LMICs) saddled with “hidden debts” totaling $385 billion, according to a new study.
The findings are part of a report released by AidData, an international development research lab based at the College of William and Mary in Virginia. According to this report, China has used debt rather than aid to establish a dominant position in the international development finance market.
The report analyzed more than 13,000 aid and debt-financed projects worth more than $843 billion in 165 countries.
According to AidData, more than 40 LMICs now have debt levels with China above 10% of their national gross domestic product.
The number of “mega-projects” – funded by loans worth $500 million or more – approved each year has tripled in the first five years of BRI implementation. Despite larger loans and expanded loan portfolios, the BRI has not led to any major changes in the sectoral or geographic composition of China’s overseas development finance program, according to the report.
According to the report, 35% of the BRI’s infrastructure project portfolio encountered major implementation issues, such as corruption scandals, labor rights violations, environmental risks and public protests. By comparison, only 21% of the Chinese government’s infrastructure project portfolio outside of the BRI encountered similar implementation issues, according to AidData.
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